Abstract
This paper examines the impact of related party transactions, off balance sheet items on earnings quality of listed deposit money banks in Nigeria over the period of 4 years (2011 to 2014). Data were collected from annual reports of the sampled banks. Descriptive statistics and correlation analysis were employed and also Ordinary least square (OLS) robust regression technique was used as a tool of analysis using panel data. The study reveals that related party transactions are positively and significantly related to earnings quality. On the contrary, off balance sheet items were found to be negatively and insignificantly related to earnings quality. Based on the findings, the study concluded that related party transactions have significant impact on the earnings quality of the Nigeria deposit money bank. The study recommends that Management of the Nigeria money deposit banks should be more aggressive towards the number of genuine related party transactions that can add value to their firms when making financial decision because it is likely to have positive effects on the quality of their earnings.
Highlights
Recent corporate financial scandals create an enormous challenge and weaknesses in corporate reporting around the world
A record of companies associated with financial scandals in the past decade was been reported by Badawi (2008) while Ge, Drury, Fortin, Liu and Tsang (2010) reported that scandals in the United States, such as Adelphia & the Riga family’s corporate group, and Hollinger & Conrad Black’s corporate group, have brought related party transactions to attract the attention of researchers and policy makers
These widespread reoccurrence of corporate financial crisis provides a need to investigate the relationship between related party transactions, off-balance sheet engagements and quality of accounting earnings, which have been observed to rise over time following the periodical business failures, frauds and court cases
Summary
Recent corporate financial scandals create an enormous challenge and weaknesses in corporate reporting around the world. A record of companies associated with financial scandals in the past decade was been reported by Badawi (2008) while Ge, Drury, Fortin, Liu and Tsang (2010) reported that scandals in the United States, such as Adelphia & the Riga family’s corporate group, and Hollinger & Conrad Black’s corporate group, have brought related party transactions to attract the attention of researchers and policy makers. Corporate scandals such as Enron and WorldCom show how related party transactions and off-balance sheet engagements may reduce the reliability of reported earnings. These widespread reoccurrence of corporate financial crisis provides a need to investigate the relationship between related party transactions, off-balance sheet engagements and quality of accounting earnings, which have been observed to rise over time following the periodical business failures, frauds and court cases
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
